SEBI bars 7 companies from capital market for violation of IPO norms

SEBI on Wednesday barred seven companies, their directors, merchant bankers and other related entities from participating in the securities market till further order for not complying with the disclosure norms in their IPO prospectus

Mumbai: Cracking whip against seven firms for not complying with the disclosure norms in their initial public offer (IPO) prospectus, the Securities and Exchange Board of India (SEBI) on Wednesday barred the companies, their directors, merchant bankers and other related entities from participating in the securities market till further order, reports PTI.

The merchant bankers who have been prohibited from participating securities market include “PNB Investment Services, the book running lead manager of IPO of Taksheel Solutions and Almondz Global Securities (PG Electroplast and Bhartiya Global Infomedia)”. Their CEOs too have been barred from participating in the capital market till further order.

“...by not complying with the regulatory obligation of making the disclosures, the company and its directors had not provided the vital information which is detrimental to the interest of investors in securities market,” SEBI order against Taksheel Solutions said.

It said that proceeds of IPO invested by the company in the Indiabulls Mutual Fund-Liquid Fund (amounting to Rs5 crore) be deposited in an escrow account, till further directions.

“Taksheel Solutions is prohibited from raising any further capital, in any manner whatsoever, till further directions,” it added.

Similar orders were passed against the other six firms.

The market regulator has asked them to deposit the proceeds from the IPOs in escrow bank accounts and also call back the IPO proceeds to their cash credit accounts.

Talking about the importance of lead book running mangers in an IPO, SEBI said if the merchant banker fails to act diligently and comply strictly with the letter and spirit of the regulations, the investors are put to grave danger, which may not be in the interest of the capital market.

“This is precisely what has happened in this (Taksheel) particular issue where lack of adequate and independent due diligence by the merchant banker has resulted into shenanigans on the part of the company and its promoters/directors,” the SEBI order said.

In its order against Tijaria Polypipes, SEBI said “the fraudulent, abusive, manipulative and illegal activities committed by the company Tijaria Polypipes and certain entities/persons to the detriment of the genuine investors and adversely affecting the integrity of securities market...SEBI as a regulator should immediately intervene...to stop further harm to investors...”

The other companies against which orders were passed, include, Bhartiya Global Infomedia, RDB Rasayans, Brooks Laboratories and PG Electroplast. Similar order too has been passed against Onelife Capital Advisors.

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Credit offtake up 17.2% as of mid December

In its first quarterly monetary policy review for FY11-12 in July, RBI had said that credit growth was likely to slow down as a result of the rate hikes. It projected the growth to be around 17%-18% this fiscal, as against the earlier estimation of 19% while deposit growth had been pegged at 17%

Mumbai: Non-food credit has grown 17.2% to Rs44 lakh crore during the 12 months to 16th December, according to the Reserve Bank of India (RBI), reports PTI.

The offtake had stood at Rs37.53 lakh crore during the 12 months to 17 December 2010.

This is the third consecutive fortnight when the annualised credit growth has stayed below 18%.

Experts said the slowdown in credit growth is on account of the high interest rate regime, which has been in place for over a year to rein in inflation.

The RBI has raised key lending rates by 350 basis points through 13 hikes since March 2010 to curb inflation, which has been above the 9% mark since December last year.

The rate of price rise was 9.11% in November.

Deposits rose to over Rs58.32 lakh crore as on 16th December, as against Rs49.50 lakh crore as of 17 December 2010. This is a growth of 17.8%.

In its first quarterly monetary policy review for FY11-12 in July, RBI had said that credit growth was likely to slow down as a result of the rate hikes.

It projected the growth to be around 17%-18% this fiscal, as against the earlier estimation of 19% while deposit growth had been pegged at 17%.

During FY 2010-11, bank credit offtake increased by 21.5%, while deposits grew by only 15.5%.

Indian industry has complained that the high interest rate regime has resulted in slowing down of investments and the industrial growth.

Economic growth slowed to a nine-quarter low of 6.9% in the July-September period. Besides, industrial growth entered the negative trajectory in October and contracted by 5.1%.

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Share prices range-bound for now: Wednesday’s Closing Report

The Nifty will remain in the 4,800-4,665 range as of now

On Wednesday, the market started declining immediately on open in line with the weak Asian markets. The Nifty opened at 4,756.2 which was its intra-day high and soon after, the downward trend started that continued until 12.45pm at which time the Sensex hit an intraday low of 15,666.46 and the Nifty of 4,685.65. The Sensex fell 146 points (0.92%) to close at 15,727.85, while the Nifty fell 45 points (0.94%) to close at 4,705.80.

Except for BSE Power Index (up 0.78%) and BSE Capital Goods (up 0.32%) indices, all the other 11 BSE sectoral indices ended in the negative, with BSE Metal Index falling the most (fell 2.05%), while BSE Bankex index fell 1.98%

On Tuesday, the Reserve Bank of India (RBI) said that banks’ investments in paid up equity of financial entities, even if they are exempted from capital market exposure, will be assigned a 125% risk weight or risk weight warranted by external rating of the counter party, whichever is higher, from 1 January 2012. Previously, such investments were assigned a 100% risk weight, the central bank said in a statement.   

There are no clues from the overseas markets about the possible market direction, since trading activity at the year end is low. The S&P 500 and the Nasdaq Composite ended in positive yesterday, while the Dow Jones ended flat as a better-than-estimated US consumer confidence report overshadowed a decline in the US home prices and concern about Europe’s debt crisis.

The Conference Board reported that its consumer confidence index came to 64.5 in December, up from 55.2 in November and outpacing market forecasts for a 58.2 reading. While the S&P/Case-Shiller Home Price Index showed home prices in a 20-city composite group fell 3.4% in October when compared to the same month in 2010, slightly worse than expected.

We expect the market to remain sideways in the tight range of 4,800 and 4,665 until a clear trend emerges after the derivatives expiry tomorrow and after trading in a new year begins on the 2nd January.

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